Welcome to the home page for the Office of the Chapter 13 Trustee in Tacoma, Washington. This website is designed to serve as a resource to the Chapter 13 community. The office operates a public trust and, as such, we strive to provide the highest level of service and financial accountability to all parties.
Update From Trustee Regarding New Justice Department Guidance Regarding Student Loans in Bankruptcy
Update From Trustee Regarding Emergency Rental Assistance Program
The widespread economic impact of the COVID-19 pandemic has affected individuals and families who have fallen behind on rent, as well as landlords who rely on rental income to meet their own expenses. As federal and state eviction moratoria expire, millions of American households face displacement from their homes in the coming months.
Through funding from the Department of the Treasury’s Emergency Rental Assistance (ERA) program, there are a wide variety of state, territorial, tribal, and local government programs that have been tailored to address the special needs of communities during these difficult times.
To assist individuals in accessing this assistance, the following notices (English and Spanish) provide an overview of the ERA, along with links to learn about available options by state (and, in some cases, county), get answers to frequently asked questions, or find a HUD approved housing counselor, among other things. The Trustee encourages all interested parties to review this information.
Notice From Trustee Regarding Recent Legislative Impact on Chapter 13 Cases (“Stimulus Bill”)
Recent federal legislation broadly implicates Chapter 13 bankruptcy practice. I offer the following as my interpretation of the relevant law to provide consistent guidance for all stakeholders in my district. In short, Debtors need not commit (or formally disclose) the direct payments and other rebates they receive pursuant to the most recent stimulus bill.
The American Rescue Plan Act of 2021, Pub. L. No. 117-2 (the “ARP”), was enacted on March 11, 2021. It provides relief for qualified individuals to address the impact of COVID-19, including additional recovery rebates and expanded child tax credits.
The ARP provides for a third round of recovery rebates, which total at most $1,400 per individual or $2,800 per married couple filing jointly, with an additional $1,400 paid for each qualifying dependent. The rebates are payable in full to qualifying individuals earning less than $75,000, married couples filing jointly earning less than $150,000, and heads of household earning less than $112,500. The rebates decrease above those thresholds until completely phased out at $80,000 for single filers, $160,000 for joint filers, and $120,000 for heads of household.
Recovery Rebates, Means Testing, and Disposable Income
Section 1113(b)(1) of the CARES Act amended 11 U.S.C. §§ 101(10A)(B)(ii) and 1325(b)(2) to exclude “payments made under Federal law relating to the national emergency declared by the President under the National Emergencies Act (50 U.S.C. § 1601 et seq.) with respect to the coronavirus disease 2019 (COVID-19)” from the statutory definitions of current monthly income and disposable income. Accordingly, recovery rebates received within six months before the filing of a bankruptcy petition need not be included in calculating a debtor’s current monthly income in a chapter 13 case, and further may be excluded from projected disposable income available to pay creditors through a chapter 13 plan.
Child Tax Credits, Means Testing, and Disposable Income
The ARP also expands the existing child tax credit for tax year 2021 by increasing it to $3,000, or $3,600 for children under six years old. The additional credit amount over the existing $2,000 per eligible child credit phases out beginning at $75,000 for individual filers, $150,000 for joint filers, and $112,500 for heads of household. The ARP also provides generally for advance payment of 50 percent of the estimated allowed child tax credit for tax year 2021.
I do not expect the additional tax credits to be a factor in determining projected disposable income in chapter 13 cases because, among other reasons, the expanded tax credit is limited to
tax year 2021.
This summary is an overview. Should any debtors desire a more thorough explanation, I strongly encourage them to contact their attorneys. We are working diligently to provide the best possible service to all stakeholders, given the challenging circumstances we face. As always, I am honored to serve as your trustee.